A Crude Marriage: Iraq, Turkey, and the Kirkuk-Ceyhan Oil Pipeline

Middle Eastern Studies ISSN: 0026-3206 (Print) 1743-7881 (Online) Journal homepage: https://www.tandfonline.com/loi/fmes20 A crude marriage: Iraq, Turkey, and the Kirkuk–Ceyhan oil pipeline John V. Bowlus To cite this article: John V. Bowlus (2017) A crude marriage: Iraq, Turkey, and the Kirkuk–Ceyhan oil pipeline, Middle Eastern Studies, 53:5, 724-746, DOI: 10.1080/00263206.2017.1283489 To link to this article: https://doi.org/10.1080/00263206.2017.1283489 Published online: 08 Feb 2017. Submit your article to this journal Article views: 406 View related articles View Crossmark data Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=fmes20 MIDDLE EASTERN STUDIES, 2017 VOL. 53, NO. 5, 724–746 http://dx.doi.org/10.1080/00263206.2017.1283489 A crude marriage: Iraq, Turkey, and the Kirkuk–Ceyhan oil pipeline John V. Bowlus Center for Energy and Sustainable Development (CESD), Kadir Has University, Istanbul, Turkey On 1 July 1974, Iraqi Deputy President Saddam Hussein flew to Ankara airport, where he met with Turkish Prime Minister Bulent€ Ecevit to discuss a host of issues. Hussein wanted Turkey to pressure Iran to withdraw its support from the Kurdish uprising in northern Iraq and to release greater flows of water from the Euphrates downstream to Iraq. Ecevit, for his part, was also eager for Iraqi diplomatic support regarding a new crisis with Greece over Cyprus and for Iraq to send greater flows of oil to Turkey. The two leaders emerged from the meeting having reached agreement on all fronts, including commitments by Iraq to increase its oil sales to Turkey and for the two countries to construct a 500,000 bar- rels per day (bpd) oil pipeline from the northern Iraqi oilfield at Kirkuk to the Turkish Medi- terranean coast at Ceyhan.1 Construction of the pipeline began in 1975, and the first oil flowed from Iraq to Turkey in 1977. From 1978–1990 to 1996–2003, the Kirkuk–Ceyhan Pipeline was an anchor for an energy partnership between Iraq and Turkey that has com- mercially and strategically benefitted both countries. Given the central role that oil plays in Turkey’s relations with Iraq and now with the autonomous Kurdish Region of Iraq (KRI) since 2011, it is surprising that there is no analy- sis of the history of the Kirkuk–Ceyhan Pipeline, particularly about its origins from 1965 to 1974. Most analyses of Iraqi–Turkish relations in the 1960s and 1970s refer to oil and the pipeline only in passing.2 Alon Liel, a former Israeli charged ’affaires in Turkey, provides the lone exception. Liel describes how the Arab oil embargo drove Turkey to embrace its oil- rich neighbours, including Iran, Libya, and Iraq, in the 1970s in order to secure its oil supplies and, possibly, reduce its overall oil bill through preferential contracts and barter agreements. He goes on to describe how, while Iran and Iraq were at war in the 1980s, it was the oil-producing countries that sought closer ties with Turkey so that it would pro- vide credit and buy oil. Liel does not, however, explain why Iraq and Turkey decided to build the pipeline in the first place, except to say that Turkey’s frustration with the West after the 1964 Cyprus Crisis led it to seek alliances with the Arab world.3 Geopolitics played a role in strengthening Iraqi–Turkish bilateral oil relations and build- ing the Kirkuk–Ceyhan Pipeline. Iraq’s support for Turkey during the 1974 Cyprus Crisis, Turkey’s diplomatic support for the Arabs during the June 1967 War and October 1973 War, and the two countries’ common interest in suppressing the aspirations of their respective Kurdish populations helped Baghdad and Ankara overcome historical mistrust to build a pipeline that served Iraq and Turkey’s commercial and strategic interests. The CONTACT John V. Bowlus [email protected] © 2017 Informa UK Limited, trading as Taylor & Francis Group MIDDLE EASTERN STUDIES 725 Kirkuk–Ceyhan Pipeline enhanced Iraq’s security of oil demand by diversifying its export routes and increasing its ability to supply European markets, while for Turkey, the pipeline provided it oil-supply security, gave it access to direct imports from Iraq, and reduced its outlay of foreign currency by earning transit fees on the oil that was transhipped from Ceyhan. The Kirkuk–Ceyhan Pipeline was also significant because it was constructed independent of ‘the majors’–the American, British, French, and Dutch oil companies that held the vast majority of concessions in the Middle East until the 1970s. The limits of relying on the majors became clear to both Iraq and Turkey as early as the Suez Crisis in 1956, when Iraq’s oil exports to the Mediterranean were cut and Turkey suffered a brief supply short- age. Iraq’s attempts to nationalize its oil industry, however, were constrained by the over- supply on the world market, a lesson revealed during the Iranian nationalization from 1951 to 1954. Turkey’s interests in maintaining ties with the majors were political and economic: Turkey was a Western client state that had its own concerns about Soviet encroachment, and the majors had begun prospecting for oil on Turkish soil in 1954. Yet, after Turkey felt abandoned by the West during the 1964 Cyprus Crisis and the promise of significant oil discoveries waned in the middle of the 1960s, Turkey actively sought greater economic ties with Iraq in 1965. Ankara’s search for new oil supplies independent of the majors and Baghdad’s desire to find consuming markets independent of the majors propelled the two governments to reach their first trade agreement in November 1965 and their first oil sale agreement in December 1967. As demand caught up with supply in the world oil market in the early 1970s, Iraq took the fateful step of nationalizing its oil industry in 1972. Nationalization provided the framework for a large, bilateral oil-supply deal between Iraq and Turkey, which was signed alongside the agreement to build the Kirkuk–Ceyhan Pipeline in May 1973, the details of which were finalized in August 1973. The Arab oil embargo from Octo- ber 1973 to March 1974, however, caused the price of oil to quadruple, sparked heated negotiations about how much Turkey would pay for each barrel of oil that it lifted from the future pipeline and postponed the project until July 1974. By examining the documen- tary record of the American, British, French, and Turkish governments and the oil companies British Petroleum and the Ente Nazionale Idrocarburi (ENI), this article seeks to fill a gap in our understanding of the history of Iraqi–Turkish relations and Middle East oil in the 1960s and the first half of the 1970s by explaining the origins of the Kirkuk–Ceyhan Pipeline. This article also seeks to add to our collective understanding of why transnational oil pipelines in the Middle East succeed or fail.4 Transnational pipelines in the Arab world generally have had a poor performance record, as mistrust based on sectarian, ethnic, and political–historical differences constrains the routes that they can take. The pipelines that were built from Iraq and Saudi Arabia between 1934 and 1950 by the majors with the support of the British, French and American governments were closed by the late 1970s due to sabotage and closures by oil-transit countries and non-state actors. Only one other transnational pipeline system has been built in the region – the Iraqi Pipelines through Saudi Arabia (IPSA) in 1985 and 1989, which pumped Iraqi oil through Saudi Arabia to the Red Sea – but Saudi Arabia closed IPSA after Iraq invaded Kuwait in 1990, converting the pipeline to transport Saudi natural gas. 726 J. V. BOWLUS The Kirkuk–Ceyhan Pipeline was therefore unique in its success from 1977 to 2003, with the pipeline’s only closure coming from 1991 to 1996, when Turkey participated in the United Nations’ sanctions imposed on Iraq. This successful performance record was due to a number of factors, but none was more important than Turkey’s characteristics, and strength, really, as an energy-transit country. Paul Stevens identifies six principles that can help make a transit country less likely to cut off the flow of oil from a producing country, three of which apply to Iraq and Turkey: (1) developing mutual dependence between the transit country and producing country on the flow of oil through the pipeline, (2) the transit country consuming oil from the pipeline, and (3) the transit country seeking foreign direct investment (FDI), which makes the transit country unlikely to close the pipeline and risk its chances of attracting future FDI.5 There are three additional reasons why Turkey has been and will likely continue to be a successful energy-transit country. First, its security forces can guard a pipeline and, even if groups opposed to the government, such as the Kurdistan Workers’ Party (PKK), either sabotage or damage pipelines, repairs can be made expediently, and pipelines can restart in a matter of days. Turkey has the largest military in the Middle East and has demon- strated willingness to employ force when its interests are threatened. Second, Turkey has no meaningful oil of its own and its growing economy – also the largest in the Middle East – makes it eager to secure its demand for oil and gas. Turkey is therefore likely to defend a pipeline and ensure its operation given its economic dependency on consuming flows through it. Finally, as a non-Arab country, Turkey can avoid the vicissitudes of intra- Arab politics that have plagued previous transnational pipelines in the region.

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